Defining Appraisal Disputes
An appraisal dispute arises when a property owner, lender, or other interested party contests the value determined by an appraisal. These disputes can occur for various reasons, including:
- Errors in the appraisal process
- Differences in opinion among appraisers
- Misrepresentation of the property’s condition
- Unrealistic market conditions
Regulatory Response
In recent years, property appraisal disputes have become increasingly common. Regulators have taken notice and have issued definitive guidance to address these disputes.
Federal Housing Finance Agency (FHFA)
The FHFA, which oversees Fannie Mae and Freddie Mac, has implemented a number of measures to improve appraisal quality and reduce disputes. These include:
- Requiring appraisers to be licensed and certified
- Establishing minimum standards for appraisals
- Creating a process for resolving appraisal disputes
Office of the Comptroller of the Currency (OCC)
The OCC, which regulates national banks, has also issued guidance on property appraisal disputes. The OCC requires banks to have a written appraisal policy and to follow sound appraisal practices.
Consequences of Appraisal Disputes
Property appraisal disputes can have significant consequences for all involved parties. For property owners, a disputed appraisal can result in:
- Difficulty obtaining financing
- Reduced property value
- Delay in the sale or purchase of a property
For lenders, appraisal disputes can lead to:
- Increased risk of loan defaults
- Reputational damage
- Legal liability
Resolving Appraisal Disputes
The first step in resolving an appraisal dispute is to communicate with the appraiser. If the issue cannot be resolved directly, there are several other options available, including:
- Filing a complaint with the state appraisal board
- Requesting a review by an independent appraisal review company
- Filing a lawsuit
Conclusion
Property appraisal disputes are a complex issue with significant consequences. Regulators have issued definitive guidance to address these disputes and improve the quality of appraisals. By understanding the causes and consequences of appraisal disputes, property owners, lenders, and other interested parties can take steps to prevent or resolve these disputes.
Kind regards J. Ross.
